Here’s a lesson for the government and Ally Financial in particular: With bank investors fretting about the potential costs of soured-mortgage claims, it is best to get the details out in the open.

That’s the opposite of how Ally and Freddie Mac handled a payment last year of $325 million by the firm to the mortgage company to settle mortgage-repurchase claims. Neither Ally, General Motors’ former financing arm now majority-owned by the government, nor government-owned Freddie disclosed the amount of the settlement when it occurred. The fact that a deal was struck at all was only disclosed by Ally and …

Abstract

Though rates of foreclosure are at a historic high, relatively little is known about the link between foreclosure and health. We performed a case–control study to examine health conditions and health care utilization in the time period prior to foreclosure. Homeowners who received a home foreclosure notice from 2005 to 2008 were matched (by name and address) to a university hospital system in Philadelphia and compared with controls who received care from the hospital system and who lived in the same zip code as cases. Outcome measures included prevalent health conditions and visit history in the 2 years prior to foreclosure. We found that people undergoing foreclosure were similar to controls with regard to age, gender, and insurance status but significantly more likely to be African American. Rates of hypertension and renal disease were significantly higher among cases after adjustment for sociodemographic characteristics. In the 2 years prior to foreclosure, cases were more likely to visit the emergency department, have an outpatient visit, and have a no-show appointment. Cases were less likely to have a primary care physicians (PCP) visit in the 6 months immediately prior to the receipt of a foreclosure notice. The results suggest changes in health care utilization in the time period prior to foreclosure. Policies designed to decrease the incidence of home foreclosure and support people during the process should consider its association with poor health and changes in health care utilization.

The last few weeks, in this newspaper, I have made an attempt to expose what is truly going on in the foreclosure process, and how it ties back to a myriad of other systematic issues affecting our daily lives. Last week, we touched on the fact that the court system is incentivized directly by the Banks that have caused this crisis. But I would be remiss if I did not mention the Foreclosure and Economic Recovery Plan, aka the “Rocket Docket.” In FY 10 -11, our legislature, (clearly influenced by the Banking lobby) devised the Rocket Docket to appoint retired Judges to reduce the backlog (grease the skids) of foreclosure cases by 62 percent during the fiscal year. You might note that appointed retired Judges do not face the scrutiny of elections.

It will be several months until a key consumer-protection provision of Hawaii’s overhauled foreclosure law can be used. But there has been one immediate impact: a freeze on many new foreclosures and auctions of homes owned by occupants.

The new law, which took effect earlier this month, did not prescribe a foreclosure moratorium, but the law prohibits lenders from holding nonjudicial foreclosure auctions until borrowers have an opportunity to participate in a dispute resolution program.

In Reckless Engagement, the latest book about the financial crisis, co-authors Gretchen Morgenson and Josh Rosner do what many of their high-profile counterparts failed to do: Name names for those responsible for the crisis.

“Instead of it seeming like it was an ‘act of god’ that couldn’t have been prevented, we try to single out some of the people who were crucial at the center in the years leading up the crisis, not just when it struck,” says Morgenson, a Pulitzer-prize winning journalist with The NY Times.

While familiar culprits like Alan Greenspan, Robert Rubin, Barney Frank are cited in the book, front and center is a name most Americans probably don’t know: James Johnson, the former chairman and CEO of Fannie Mae.

The Department of Housing and Urban Development will re-foreclose on all its REO properties in Michigan where the original foreclosure was conducted in the name of MERS using the state’s nonjudicial process.

U.S. banks and state attorneys general, seeking to avoid $17 billion in court claims over faulty foreclosures, are discussing a settlement framework that may let firms choose from a menu of options for helping borrowers, two people briefed on the talks said.

In the midst of the global financial crisis in 2008, the Federal Reserve lent Goldman Sachs, Credit Suisse and Royal Bank of Scotland at least $30 billion each at interest rates as low as 0.01 percent with no public disclosure of the details, Bloomberg News reported on Thursday.

The latest revelations about the covert infusions of credit provided by the Fed to some of the world’s largest banks has amplified accusations that the central bank is a power unto itself, operating according to its own devices and in the interest of major financial institutions — and beyond accountability to taxpayers.

“It just points out that this was about secrecy to protect banks basically from embarrassment from transparency, which is not supposed to be what the Fed’s about,” said Dean Baker, co-director of the Center for Economic Policy and Research, in Washington.

“That is the fundamental problem with the Fed,” Baker added. “They’re supposed to be an agency of the government, not an agency of the banks. But reflexively, there they are protecting the banks, again and again and again.”

Supreme Court, Kings County

NYCTL 2005-A Trust AND THE BANK OF NEW YORK, AS COLLATERAL AGENT AND CUSTODIAN, Plaintiff,

against

Dionisio Arias, et al., Defendants.

23043/06

Plaintiff

Philips Lytle, LLP

Rochester NY

Defendant

No Appearance

Arthur M. Schack, J.

In this tax lien certificate foreclosure action, plaintiff, NYCTL 2005-A TRUST AND THE BANK OF NEW YORK, AS COLLATERAL AGENT AND CUSTODIAN (THE TRUST), moved for a judgment of foreclosure and sale for the premises located at 199 Troutman Street, Brooklyn, New York (Block 3173, Lot 37, County of Kings). On March 4, 2011, the Court received from the Kings County Supreme Court Foreclosure Department a notice of withdrawal of the instant motion, dated February 16, 2011, from plaintiff’s counsel, Phillips Lytle LLP. The notice of withdrawal did not state any reason for the request.

Then, on May 23, 2011, plaintiff’s counsel faxed to me a “second request” to withdraw [*2]the instant motion for a judgment of foreclosure and sale. Again, no reason for the request was articulated. Further, at the bottom of the May 23, 2011-letter to me, it states “THIS LAW FIRM IS ATTEMPTING TO COLLECT A DEBT AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE.” Since this statement is in a cover letter addressed to me and does not appear to be preprinted on the letterhead of the Phillips Lytle firm, the Court would like to know what debt I personally owe to the Phillips Lytle firm or THE TRUST. This statement borders upon frivolous conduct, in violation of 22 NYCRR § 130-1.1. Was it made to cause annoyance or alarm to the Court? Was it made to waste judicial resources? Rather than answer the above rhetorical questions, counsel for plaintiff is directed never to place such a foolish statement in a cover letter to this Court. If this occurs again, the firm of Phillips Lytle LLP is on notice that this Court will have the firm appear to explain why the firm should not be sanctioned for frivolous conduct.

With respect to the request of plaintiff’s counsel to withdraw the instant motion for a judgment of foreclosure and sale, the Court grants the request to withdraw the motion. However, since plaintiff, THE TRUST, is not discontinuing the instant foreclosure action, the Court, to prevent the waste of judicial resources, for procedural reasons and not upon the merits, dismisses the instant foreclosure action with prejudice.

Discussion

Real Property Actions and Proceedings Law (RPAPL) § 1321 allows the Court in a foreclosure action, upon the default of the defendant or defendant’s admission of mortgage payment arrears, to appoint a referee “to compute the amount due to the plaintiff.” In the instant action, the referee computed the amount due. Then, plaintiff, THE TRUST, moved, as required, to obtain a default judgment of foreclosure and sale against defendant ARIAS. Subsequently, plaintiff requested that the Court allow it to withdraw its motion for a judgment of foreclosure and sale. The Court grants plaintiff’s request to withdraw its motion for a judgment of foreclosure and sale. However, to allow the instant action to continue without seeking the ultimate purpose of a foreclosure action, to obtain a judgment of foreclosure and sale, without any valid reason, is a mockery and waste of judicial resources. Continuing the instant action without moving for a judgment of foreclosure and sale is the judicial equivalent of a “timeout,” and granting a “timeout” to plaintiff, THE TRUST, is a waste of judicial resources. Therefore, the instant action, for these procedural reasons, is dismissed with prejudice.

Moreover, the dismissal of the instant foreclosure action requires the cancellation of the notice of pendency. CPLR § 6501 provides that the filing of a notice of pendency against a property is to give constructive notice to any purchaser of real property or encumbrancer against real property of an action that “would affect the title to, or the possession, use or enjoyment of real property, except in a summary proceeding brought to recover the possession of real property.” The Court of Appeals, in 5308 Realty Corp. v O & Y Equity Corp. (64 NY2d 313, 319 [1984]), commented that “[t]he purpose of the doctrine was to assure that a court retained its ability to effect justice by preserving its power over the property, regardless of whether a purchaser had any notice of the pending suit,” and, at 320, that “the statutory scheme permits a party to effectively retard the alienability of real property without any prior judicial review.”

CPLR § 6514 (a) provides for the mandatory cancellation of a notice of pendency by:

The Court,upon motion of any person aggrieved and upon such [*3]

notice as it may require, shall direct any county clerk to cancel

a notice of pendency, if service of a summons has not been completed

within the time limited by section 6512; or if the action has been

settled, discontinued or abated; or if the time to appeal from a final

judgment against the plaintiff has expired; or if enforcement of a

final judgment against the plaintiff has not been stayed pursuant

to section 551. [emphasis added]

The plain meaning of the word “abated,” as used in CPLR § 6514 (a) is the ending of an action. “Abatement” is defined as “the act of eliminating or nullifying.” (Black’s Law Dictionary 3 [7th ed 1999]). “An action which has been abated is dead, and any further enforcement of the cause of action requires the bringing of a new action, provided that a cause of action remains (2A Carmody-Wait 2d § 11.1).” (Nastasi v Nastasi, 26 AD3d 32, 40 [2d Dept 2005]). Further, Nastasi at 36, held that the “[c]ancellation of a notice of pendency can be granted in the exercise of the inherent power of the court where its filing fails to comply with CPLR § 6501 (see 5303 Realty Corp. v O & Y Equity Corp., supra at 320-321; Rose v Montt Assets, 250 AD2d 451, 451-452 [1d Dept 1998]; Siegel, NY Prac § 336 [4th ed]).” Thus, the dismissal of the instant complaint must result in the mandatory cancellation of THE TRUST’s notices of pendency against the subject property “in the exercise of the inherent power of the court.”

Conclusion

Accordingly, it is

ORDERED, that the request of plaintiff, NYCTL 2005-A TRUST AND THE BANK OF NEW YORK, AS COLLATERAL AGENT AND CUSTODIAN, to withdraw its motion for a judgment of foreclosure and sale, for the premises located at 199 Troutman Street, Brooklyn, New York (Block 3173, Lot 37, County of Kings), is granted; and it is further

ORDERED, that the instant action, Index Number 23043/06, is dismissed with prejudice; and it is further

ORDERED, that the notices of pendency in the instant action, filed with the Kings County Clerk on August 2, 2006 and July 16, 2009, by plaintiff, NYCTL 2005-A TRUST AND THE BANK OF NEW YORK, AS COLLATERAL AGENT AND CUSTODIAN, to foreclose on a tax lien certificate for real property located at 199 Troutman Street, Brooklyn, New York (Block 3173, Lot 37, County of Kings), is cancelled and discharged; and it is further

ORDERED, that Phillips Lytle, LLP is on notice that if any of attorneys or staff sends any communication to this Court stating “THIS LAW FIRM IS ATTEMPTING TO COLLECT A DEBT AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE,” it may be subject to civil contempt and/or sanctions for frivolous conduct, pursuant to 22 NYCRR § 130-1.1.

{¶8} In support of its motion for summary judgment, CitiMortgage relied on the affidavit of Aaron Menne, who identified himself as its vice president. Menne averred that he had custody of and familiarity with the “records of the payments on the account of Ziad F. Elia.” Menne further averred that the September 1, 2008 payment was the last one received on the account and, due to a default thereafter, “[CitiMortgage] *** elected to call the entire balance of
said account due and payable, in accordance with the terms of the note and mortgage.” The affidavit then noted the amount due and owing on the loan and the applicable interest rate. CitiMortgage did not attach any documents to Menne’s affidavit or incorporate any documents by reference through his affidavit. The affidavit was the only item appended to CitiMortgage’s motion. The copies of the note and mortgage upon which CitiMortgage brought suit were filed with the complaint.

[…]

Personal Knowledge

{¶11} The Elias argue that CitiMortgage’s affiant, Menne, could not have personal knowledge of the truth of the statements set forth in his affidavit because: (1) CitiMortgage was not even assigned the mortgage until after the alleged default occurred; and (2) Menne’s affiliation with CitiMortgage was in question, as he claimed to be a vice president of both CitiMortgage and MERS “at virtually the same time.”

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

Considering what is commonly known about the MERS system and the secondary market in mortgage loans, plaintiffs allege sufficient facts to make clear that defendants violated the Oregon Trust Deed Act by failing to record all assignments of the trust deed. 3 Therefore, defendants’ motion to dismiss is DENIED.

[…]

Although not affecting my conclusion here, the MIN Summary raises an additional concern relevant to numerous cases pending fore me. As noted above, GN is listed as Lender on both the trust deed and the note. The MIN Summary, however, makes no mention of GN. In fact, MIN Summary is silent as to how or when Guaranty Bank became an “Investor” holding the beneficial interest in the trust deed. (Jan. 31, 2011 McCarthy Decl., Ex. 1, 2.) The MIN Summary indicates only that on December 1, 2005, Guaranty Bank registered the in the MERS system. What occurred before registration, and how or when Guaranty Bank obtained any interest the loan (from GN or another) is not revealed.

The apparent gap in chain of title is not the only issue that causes me concern….

[…]

Foreclosure by advertisement and sale, which is designed to take place outside of any judicial review, necessarily relies on the foreclosing party to accurately review and assess its own authority to foreclose. Considering that non-judicial foreclosure of one’s home is a particularly harsh event, and given the numerous problems I see in nearly every non-judicial foreclosure case I preside over, a procedure relying on a bank or trustee to self-assess its own authority to foreclose is deeply troubling to me.

I recognize that MERS, and its registered bank users, created much of the confusion involved in the foreclosure process…. [T]he MERS system creates confusion as to who has the authority to do what with the trust deed. The MERS system raises serious concerns regarding the appropriateness and validity of foreclosure by advertisement and sale outside of any judicial proceeding.

Additionally, the MERS system allowed the rise of the secondary market and securitization of home loans. A lender intending to immediately sell a loan on the secondary market is not concerned with the risk involved in the loan, but with the fees generated. If a lender aims to quickly pass a loan off onto an investor, a stated-income loan appears not as an unacceptable risk, but as an income stream. MERS makes it much more difficult for all parties to discover who “owns”the loan. When a borrower on the verge of default cannot find out who has the authority to modify the loan, a modification or a short sale, even if beneficial to both the borrower and the beneficiary, cannot occur.

When no borrowers default, the problems inherent in the MERS system may go unnoticed. Unfortunately for banks, borrowers, investors, and courts throughout the country, many borrowers are now defaulting. Countless grantors of trust deeds now face the harsh prospect of losing a home outside of any judicial proceeding. At the same time, the MERS system greatly increased the number of investors stuck holding worthless notes. A lender that knows it will immediately sell a loan on the secondary market has no incentive to ensure the appraisal of the security is accurate. Similarly, the lender need not concern itself with the veracity of any representations made to the borrower. In short, the MERS system allows the lender to shirk its traditional due diligence duties. The requirement under Oregon law that all assignments be recorded prior to a non-judicial foreclosure is sound public policy.

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

B. Substantive Claims

Plaintiffs’ claims which sound in the Washington State Consumer Protection Act survive. Plaintiffs have successfully alleged that certain named defendants committed unfair deceptive acts and that these acts have injured their property interest in their home. See Guijosa, 32 P.3d at 255 (listing elements). It goes without saying that such acts have the potential to adversely affect the public interest: The banking defendants allegedly securitized more than three billion dollars of mortgages initiated by Defendant WMC Mortgage alone. The allegedly wrongful acts were therefore “part of a pattern or generalized course of conduct,” and had the potential “to affect many different customers.” See Hangman Ridge, 719 P.2d at 537–38.

Plaintiffs claims which sound in the common law of fraud also survive. Plaintiffs allege that certain named defendants misrepresented terms such as the interest rate and term of their mortgage loans. (Second Amended Complaint 13–16 (Dkt. No. 45)). Plaintiffs further allege that defendants fraudulently charged them for brokerage fees to which they were unentitled, and that the defendants listed these fees as “final settlement fees” on federal disclosure forms. (Id. 15). A reasonable person would consider such key terms to be “material,” and a reasonable person would be entitled to rely on the representations of individuals who hold themselves out as mortgage professionals. See Beckendorf, 457 P.2d at 606–07 (listing the elements of fraud).

C. Theories of Liability

However one wishes to describe the allegedly wrongful participation of Defendant Barclays Capital and Defendant Deutsche Bank—whether sounding in civil conspiracy, aiding and abetting, or joint venture—the analysis is essentially the same: Plaintiffs have successfully alleged that the banking defendants knowingly participated in a scheme to defraud borrowers. To support these allegations, Plaintiffs rely on a letter from the Office of the Comptroller of the Currency and fraudulent misstatements in the loan documents that the banking defendants received. Because a plaintiff may rely upon circumstantial evidence to support each of the proffered theories of liability, see, e.g., Gilbrook, 177 F.3d at 856 (civil conspiracy), Refrigeration Engineering, 486 P.2d at 311 (joint venture), and because Plaintiffs have submitted circumstantial evidence tending to indicate that the banking defendants knowingly participated in a scheme to defraud, their claims survive.

Steven Soraya, who had a loan amounting to $980,500.00 with Wells Fargo, which was released on July 3, 2007 and which just so happens was signed by Robosigner extraordinaire, the one, the only, the infamous Linda Green. Ergo our question: did miss Palin just procure a property to which there is no legitimate title, and which, therefore, may not have been legitimately sold to her? Oh yes, MERS is of course involved too.

Justice Department Settles with Bank of America and Saxon Mortgage for Illegally Foreclosing on Servicemembers

Settlement Includes a Minimum of $22 Million in Relief for Victims

WASHINGTON – The Justice Department today announced settlements with two lenders under the Servicemembers Civil Relief Act (SCRA) to resolve allegations that the lenders wrongfully foreclosed upon active duty servicemembers without first obtaining court orders, in violation of the SCRA. Combined, the settlements provide more than $22 million in monetary relief for the victims.

Under the first settlement , BAC Home Loans Servicing LP, formerly known as Countrywide Home Loans Servicing LP, a subsidiary of Bank of America Corporation, will pay $20 million to resolve a lawsuit alleging that Countrywide foreclosed on approximately 160 servicemembers between January 2006 and May 2009 without court orders. In addition to the $20 million, Countrywide agreed to pay any servicemember wrongfully foreclosed in the period from June 2009 through 2010. The complaint alleges that Countrywide did not consistently check the military status of borrowers on whom it foreclosed through at least May 31, 2009. The complaint was filed in the Central District of California, where Countrywide is headquartered.

Under the second settlement, Saxon Mortgage Services Inc., a subsidiary of Morgan Stanley, will pay $2.35 million to resolve a lawsuit alleging that Saxon foreclosed on approximately 17 servicemembers between January 2006 and June 2009 without court orders. In addition to the $2.35 million, Saxon agreed to pay any servicemember wrongfully foreclosed in the period from July 2009 through 2010. The complaint alleges that Saxon failed to consistently or accurately check the military status of borrowers on whom it foreclosed through at least June 30, 2009. The complaint was filed in the Northern District of Texas, where Saxon is headquartered.

“The men and women who serve our nation in the armed forces deserve, at the very least, to know that they will not have their homes taken from them wrongfully while they are bravely putting their lives on the line on behalf of their country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division of the Department of Justice. “The Civil Rights Division is committed to aggressively enforcing those laws that protect the rights of servicemembers. All lenders have an obligation to do their part to work with servicemembers while these brave men and women focus on keeping us safe. The Justice Department also thanks the Department of Defense for its critical assistance in identifying servicemembers whose rights were violated”

“Countrywide Home Loans failed to protect and respect the rights of our servicemembers, failed to comply with clearly mandated procedures and foreclosed against homeowners who are valiantly serving our nation,” said André Birotte Jr, U.S. Attorney for the Central District of California. “Military families lost their homes when Countrywide violated the law, causing undue stress to wartime personnel who have been protected from such actions since the Civil War.”

“With the numerous sacrifices our servicemembers make while they are serving our country, the last thing they need to worry about is whether or not their families will be forced from their homes,” said James T. Jacks, U.S. Attorney for the Northern District of Texas. “These lenders’ callous disregard for the SCRA, a law which was designed to insulate these patriots from unlawful foreclosures and other civil and financial obligations while they are on active duty, is deplorable and I applaud the Department’s Civil Rights Division’s efforts in identifying and seeking remedies for these wronged service members.”

Of the approximately 160 servicemembers upon whom Countrywide foreclosed without obtaining court orders, Countrywide allegedly foreclosed in many instances where it knew, or should have known, about their military status. The victims include individuals who have served honorably in Iraq and Afghanistan. The Department of Justice initiated its SCRA investigation of Countrywide in response to a referral by the U.S. Marine Corps regarding an active duty servicemember who was facing foreclosure by Countrywide.

Under the consent decree, Countrywide will establish a settlement fund of $20 million to compensate the servicemembers upon whom Countrywide foreclosed between January 1, 2006, and May 31, 2009. In addition to this settlement fund, Countrywide has agreed to compensate any additional SCRA-eligible individuals on whom Countrywide foreclosed without court orders between June 1, 2009, and Dec. 31, 2010. The consent decree also requires numerous corrective measures, including SCRA training for Countrywide employees and agents, developing modified SCRA policies and procedures and referring future SCRA complaints to the Justice Department. Countrywide will also repair any negative credit report entries related to the allegedly wrongful foreclosures and will not pursue any remaining amounts owed under the mortgages. Countrywide now will check the Defense Manpower Data Center’s website and its own files prior to conducting any foreclosure, and will not foreclose in violation of the SCRA if the borrower is in military service or is otherwise protected by the SCRA.

Of the approximately 18 servicemembers upon whom Saxon foreclosed without obtaining court orders, Saxon allegedly foreclosed on at least 10 servicemembers when Saxon knew or should have known about their military status. The servicemembers Saxon foreclosed on include men and women who have served honorably in Iraq, some of whom were severely injured in the line of duty or suffer from post-traumatic stress disorder. The Department of Justice initiated its SCRA investigation in response to an inquiry from Sergeant James Hurley, who resolved his claims against Saxon earlier this year in a confidential settlement.

Under the consent decree, Saxon will establish a settlement fund of $2.35 million to compensate the servicemembers upon whom Saxon allegedly wrongfully foreclosed between 2006 and 2009. In addition to this settlement fund, Saxon also has agreed to compensate any additional SCRA-eligible servicemembers on whom Saxon foreclosed without court orders between July 1, 2009, and Dec. 31, 2010. The consent decree also requires numerous corrective measures, including SCRA training for Saxon employees and agents, developing modified SCRA policies and procedures, and referring future SCRA complaints to the Justice Department. Saxon will also repair any negative credit report entries related to the wrongful foreclosures and will not pursue any remaining amounts owing under the mortgages. Saxon now will check the Defense Manpower Data Center’s website and its own files prior to conducting any foreclosure, and will not foreclose in violation of the SCRA if the borrower is in military service or is otherwise protected by the SCRA.

The division’s SCRA investigations have resulted in litigation or settlements enforcing SCRA’s provisions for termination of residential lease agreements, protection against enforcement of storage liens on towed vehicles without court orders, reduction of interest rates to six percent on credit obligations, and a prohibition against paying pre-payment penalties on mortgage loans when a servicemember must move for military service.

President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.stopfraud.gov .

Servicemembers and their dependents who believe that their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance Program office. Please consult the military legal assistance office locator at http://legalassistance.law.af.mil and click on the Legal Services Locator. Additional information about the Justice Department’s enforcement of the SCRA and the other laws protecting servicemembers is available at www.servicemembers.gov. Servicemembers who believe they may have been victims, can contact the banks directly at 1-800-896-7743, mailbox 6 for Countrywide or 1-800-896-7743, mailbox 995 for Saxon.

Nearly a dozen major banks and hedge funds, anticipating quick profits from homeowners who fall behind on property taxes, are quietly plowing hundreds of millions of dollars into businesses that collect the debts, tack on escalating fees and threaten to foreclose on the homes of those who fail to pay.

The investors, which include Bank of America and JPMorgan Chase, have purchased from local governments the right to collect delinquent taxes on several hundred thousand properties, many in distressed housing markets, the Huffington Post Investigative Fund has found.

In many cases, banks and hedge funds created new companies to do their bidding.

In exchange for paying overdue real-estate taxes, the investors gain legal powers to collect the debts and levy fees. At first, property owners may owe little more than a few hundred dollars, only to find their bills soaring into the thousands. Some jurisdictions tack on bills, such as for water, sewer and sidewalk repair.

HBO’s “Too Big To Fail”—I just caught up with it last night; thank you, HBO On Demand—is extraordinarily revealing about the financial crisis. Only its revelations are almost entirely inadvertent.

The movie is set up in the Hollywood conventional way: A gang of misfits, each with a special expertise, is brought together for an impossible mission. There’s Treasury Secretary Henry Paulson, steely eyed at the moment of truth. There’s New York Federal Reserve head Timothy Geithner, the athlete (he doesn’t just jog, but also plays what appears to be squash). And then there’s Federal Reserve chairman Ben Bernanke, the professor with a heart of gold and secret knowledge of the Great Depression.

Ostensibly it’s a story of their success against all odds. Michael Kinsley, reviewing the movie in the New York Times, labeled Hank Paulson [1] the “hero” of the account.

Except that the movie actually depicts something entirely different: failure upon failure. “Too Big To Fail” The Movie isn’t the story of how the Three Musketeers saved the global economy. It’s a story of how the three didn’t see the financial crisis coming; hadn’t prepared for it; made mistake after mistake as it was cresting; and then, in their moment of triumph, made their most colossal blunder of all.

Senator Patrick Leahy (D-Vt.) introduced legislation Tuesday to strengthen the tools available to U.S. bankruptcy trustees to protect American homeowners from creditor fraud in bankruptcy court. Leahy introduced the Fighting Fraud in Bankruptcy Act, with cosponsors Sheldon Whitehouse (D-R.I.) and Richard Blumenthal (D-Conn.).

“The Fighting Fraud in Bankruptcy Act is another step forward in the Judiciary Committee’s important efforts to protect American citizens from fraud,” said Leahy. “As Congress looks at ways to mitigate the foreclosure crisis to reduce its impact on homeowners and the economy, I hope all Senators can agree that the foreclosure process for Americans should be a fair one and one in which there is accountability for fraud or other misconduct. And I hope we can all agree that the integrity of our judicial system is something worth protecting.”

“It’s inexcusable when big banks hit homeowners with bogus mortgage fees and improper foreclosures,” said Whitehouse. “This bill will help ensure that Rhode Islanders who fall on hard times have access to a fair bankruptcy process and a chance at a fresh start.”

“Homeowners facing foreclosure, including military personnel serving our country far from their homes, are entitled to full legal protection from fraud and misconduct,” said Blumenthal. “This commonsense proposal simply strengthens existing authority for holding creditors accountable for abuses. It will deter needless litigation that is currently wasting resources, clogging the bankruptcy courts, and slowing our economic recovery.”

The Fighting Fraud in Bankruptcy Act includes four key provisions. The legislation will:

Clarify that U.S. trustee has a duty to take action to remedy creditor abuse of the bankruptcy process;

Permit the bankruptcy court, either on its own or in response to a motion from the trustee, to correct or sanction misconduct and fraud committed by creditors in the bankruptcy process;

Empower the trustee to establish audit procedures to ensure that creditors are complying with the law;

Require a mortgage lender to certify under penalty of perjury that a foreclosure proceeding against active duty members of the military who are deployed is in compliance with the Servicemembers Civil Relief Act (SCRA). The SCRA protects active duty military personnel by requiring a stable, manageable interest rate for military homeowners on active duty, and staying foreclosure actions during their deployment.

The Judiciary Committee has held several hearings in recent years regarding the foreclosure crisis. Earlier this year, the Committee considered and reported to the full Senate the Limiting Investor and Homeowner Loss in Foreclosure Act to authorize bankruptcy courts to establish loss mitigation programs to avoid foreclosures.